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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE
ACT OF 1934
------------------------
DUTY FREE INTERNATIONAL, INC.
(Name of Subject Company)
------------------------
BAA PLC
W&G ACQUISITION CORPORATION
(Bidders)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
------------------------
267 08410
(CUSIP Number of Class of Securities)
------------------------
ROBERT HERGA
HEAD OF LEGAL SERVICES
BAA PLC
STOCKLEY HOUSE
130 WILTON ROAD
LONDON SW1V 1LQ
(Name, address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
------------------------
COPY TO:
STEPHEN A. GREENE, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
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(Page 1 of 5 Pages)
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This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 originally filed with the Securities and Exchange Commission on
July 9, 1997 (as heretofore amended, the "Schedule 14D-1"), by BAA plc a
corporation organized under the laws of the United Kingdom and W&G Acquisition
Corporation, a Maryland corporation, relating to the offer disclosed therein to
purchase all outstanding shares of common stock, par value $.01 per share, of
Duty Free International, Inc., a Maryland corporation. Capitalized terms used
herein without definition shall have the meanings set forth in the Schedule
14D-1.)
ITEM 15 CERTAIN LEGAL MATTERS
Item 15 is hereby amended and supplemented by adding thereto the following:
(a)(9)--Amended Offer to Purchase, dated July 25, 1997.
(Page 2 of 5 Pages)
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
BAA PLC
By: /s/ J. RUSSELL F. WALLS
-----------------------------------------
Name: J. Russell F. Walls
Title: Group Finance Director
Dated: July 25, 1997
(Page 3 of 5 Pages)
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
W&G ACQUISITION CORPORATION
By: /s/ J. RUSSELL F. WALLS
-----------------------------------------
Name: J. Russell F. Walls
Title: President
Dated: July 25, 1997
(Page 4 of 5 Pages)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------------------------- ------------------------------------------------------------------------------------
<S> <C>
(a)(9) -Amended Offer to Purchase, dated July 25, 1997
</TABLE>
(Page 5 of 5 Pages)
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Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUTY FREE INTERNATIONAL, INC.
AT
$24 NET PER SHARE
BY
W&G ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAA PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON AUGUST 5, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (AS DEFINED HEREIN) WHICH CONSTITUTES AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS
AND CONDITIONS. SEE SECTION 14.
IN CONNECTION WITH THE EXECUTION OF THE MERGER AGREEMENT (AS DEFINED
HEREIN), THE BENEFICIAL OWNERS OF APPROXIMATELY 32% OF THE OUTSTANDING SHARES
AGREED TO TENDER SUCH SHARES PURSUANT TO THE OFFER.
------------------------
THE BOARD OF DIRECTORS OF DUTY FREE INTERNATIONAL, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT (AS DEFINED
HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE MERGER
AGREEMENT ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $.01 per share, of the Company (the "Shares")
should either (a) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered Shares,
and any other required documents, to the Depositary or tender such Shares
pursuant to the procedures for book-entry transfer set forth in Section 3 or (b)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if such stockholder desires to tender such
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on a
timely basis may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may also be directed to the
Information Agent. A
<PAGE>
stockholder may also contact brokers, dealers, commercial banks and trust
companies for assistance concerning this Offer.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
GLEACHER NATWEST INC.
July 25, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION............................................................................................... 1
1. Terms of the Offer..................................................................................... 2
2. Acceptance for Payment and Payment for Shares.......................................................... 4
3. Procedures for Tendering Shares........................................................................ 5
4. Withdrawal Rights...................................................................................... 8
5. Certain Federal Income Tax Consequences................................................................ 8
6. Price Range of Shares; Dividends....................................................................... 9
7. Effect of the Offer on the Market for the Shares; NYSE Quotation and Exchange Act Registration......... 9
8. Certain Information Concerning the Company............................................................. 10
9. Certain Information Concerning the Purchaser and Parent................................................ 12
10. Source and Amount of Funds............................................................................. 13
11. Background of the Offer; Contacts with the Company..................................................... 13
12. Purpose of the Offer, Merger, Merger Agreement, Shareholders Agreement, and Option Agreement........... 15
13. Dividends and Distributions............................................................................ 26
14. Conditions to the Offer................................................................................ 26
15. Certain Legal Matters.................................................................................. 28
16. Fees and Expenses...................................................................................... 30
17. Miscellaneous.......................................................................................... 31
Schedule I-- DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER.................................. I-1
</TABLE>
i
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TO THE HOLDERS OF COMMON STOCK OF
DUTY FREE INTERNATIONAL, INC.:
INTRODUCTION
W&G Acquisition Corporation, a Maryland corporation (the "Purchaser") and a
wholly owned subsidiary of BAA plc, a corporation organized under the laws of
England ("Parent"), hereby offers to purchase all outstanding shares of common
stock, par value $.01 per share (the "Shares"), of Duty Free International,
Inc., a Maryland corporation (the "Company"), at $24 per Share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all fees of Gleacher NatWest Inc.,
which is acting as the Dealer Manager (the "Dealer Manager"), and all fees and
expenses of IBJ Schroder Bank & Trust Company, which is acting as the Depositary
(the "Depositary"), and of MacKenzie Partners, Inc., which is acting as the
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which would represent at least a majority of the Shares outstanding on a
fully diluted basis (the "Minimum Condition"). The Offer is also conditioned
upon the Purchaser obtaining certain governmental approvals. See Section 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 2, 1997 (the "Merger Agreement"), by and among the Company, Parent
and the Purchaser. The Merger Agreement provides that, among other things,
following the consummation of the Offer and the satisfaction or waiver of the
other conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the Maryland General Corporation Law as amended (the
"MGCL"), the Purchaser will be merged with the Company (the "Merger"). Following
consummation of the Merger, the surviving corporation (the "Surviving
Corporation") will be a wholly owned subsidiary of Parent. At the effective time
of the Merger (the "Effective Time"), each outstanding Share (other than Shares
owned by the Company or by any subsidiary of the Company and Shares owned by
Parent, the Purchaser or any other subsidiary of Parent or held by stockholders,
if any, who are entitled to and who properly exercise dissenters' rights under
the MGCL) will be converted into the right to receive an amount in cash equal to
the price per Share paid pursuant to the Offer, without interest. See Section
12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER,
THE MERGER AND THE MERGER AGREEMENT ARE ADVISABLE AND FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Compass Partners International, L.L.C., the Company's financial advisor, has
delivered to the Board of Directors of the Company its written opinion dated
July 2, 1997 that, as of such date and on the basis of and subject to the
matters set forth therein, the cash consideration to be received by the holders
of Shares in the Offer and the Merger was fair, from a financial point of view,
to such holders. Such opinion is set forth in full as an exhibit to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), which is being mailed to stockholders of the Company herewith.
Under the MGCL, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser may elect
to approve and adopt the Merger without a vote of the Company's stockholders. In
such event, Parent, the Purchaser and the Company have agreed to take, at the
1
<PAGE>
request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's stockholders. If, however, the Purchaser does
not acquire at least 90% of the then outstanding Shares pursuant to the Offer or
otherwise or does not elect to consummate the Merger without a stockholder vote,
a longer period of time will be required to effect the Merger. See Section 12.
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered pursuant to
the Offer as soon as practicable after the Expiration Date (as hereinafter
defined). The Merger Agreement provides that the Purchaser may under certain
circumstances, from time to time, extend the expiration date of the Offer beyond
the time it would otherwise be required to accept validly tendered Shares for
payment. The Offer will not remain open following the time Shares are accepted
for payment.
In connection with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Shareholders Agreement, dated as of July 2, 1997 (the
"Shareholders Agreement"), with certain shareholders (the "Selling
Stockholders"), the beneficial owners of an aggregate of 8,626,073 Shares, or
approximately 32% of the Shares outstanding on July 1, 1997. Pursuant to the
Shareholders Agreement, the Selling Stockholders have agreed to validly tender
pursuant to the Offer and not withdraw all Shares which are beneficially owned
by the Selling Stockholders not later than the fifth business day after the
commencement of the Offer. The Shareholders Agreement is more fully described in
Section 12.
In connection with the Merger Agreement, Parent and the Company have entered
into a stock option agreement, dated as of July 2, 1997 (the "Option
Agreement"), pursuant to which the Company has granted to Parent an irrevocable
option (the "Option") to purchase up to 5,434,367 newly issued Shares (the
"Option Shares"), upon the terms and subject to the conditions of the Option
Agreement, at a price of $24 per Option Share. The Option is exercisable upon
the occurrence of certain events. See Section 12 for a description of the Option
Agreement.
According to the Company, as of July 1, 1997 there were 27,353,088 Shares
issued and outstanding, and 2,143,220 Shares reserved for issuance pursuant to
the Company's outstanding stock options. Based upon the foregoing information,
the Minimum Condition would be satisfied if 14,748,155 Shares were validly
tendered.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on August 5, 1997, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the Purchaser obtaining certain governmental approvals.
See Section 14, which sets forth in full the conditions to the Offer. If the
Minimum Condition is not satisfied or any or all of the other events set forth
in Section 14 shall have occurred or shall be determined by the Purchaser to
have occurred prior to the Expiration Date, the Purchaser reserves the right
(but shall not be obligated) to (i) decline to purchase any of the Shares
tendered in the Offer and terminate the Offer and return all tendered Shares to
the tendering
2
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stockholders, (ii) waive any or all conditions to the Offer, to the extent
permitted by applicable law and the provisions of the Merger Agreement and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"), purchase all Shares validly tendered, (iii)
subject to the terms of the Merger Agreement, extend the Offer and, subject to
the right of stockholders to withdraw Shares until the Expiration Date, retain
the Shares which have been tendered during the period or periods for which the
Offer is extended or (iv) subject to the terms of the Merger Agreement, amend
the Offer. The Merger Agreement provides that the Purchaser will not, without
the consent of the Company, reduce the number of Shares sought in the Offer,
reduce the Offer Price, modify or add to the conditions of the Offer set forth
in "Conditions to the Offer" below or otherwise amend the Offer in any manner
materially adverse to the Company's stockholders, except as provided in the next
two sentences, extend the Offer or change the form of consideration payable in
the Offer. Notwithstanding the foregoing, the Purchaser may, without the consent
of the Company, (i) extend the Offer for a period of not more than 10 business
days beyond the initial expiration date of the Offer (which initial expiration
date shall be 20 business days following commencement of the Offer), if on the
date of such extension less than 90% of the outstanding Shares have been validly
tendered and not properly withdrawn pursuant to the Offer, (ii) extend the Offer
from time to time if at the initial expiration date or any extension thereof the
Minimum Condition or any of the other conditions to the Purchaser's obligation
to purchase Shares set forth in paragraphs (a), (b) and (e) under "Conditions to
the Offer" below shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (iii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer and (iv) extend the Offer for any reason
for a period of not more than 10 business days beyond the latest expiration date
that would otherwise be permitted under clause (i), (ii) or (iii) of this
sentence. In addition, the Purchaser shall at the request of the Company extend
the Offer for five business days if at any scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligation to purchase Shares
shall not be satisfied; PROVIDED, HOWEVER, that the Purchaser shall not be
required to extend the Offer beyond December 31, 1997.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) to amend the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to Section
14. Any extension, amendment or termination will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act. Without limiting
the obligation of the Purchaser under such rules or the manner in which the
Purchaser may choose to make any public announcement, the Purchaser currently
intends to make announcements by issuing a release to the Dow Jones News Service
and the London Stock Exchange.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares that the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of the offer.
3
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If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition, subject to the Merger Agreement), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or information concerning the Offer,
other than a change in price or a change in percentage of securities sought,
will depend upon the facts and circumstances, including the relative materiality
of the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is required
to allow for adequate dissemination to stockholders and investor response. If,
prior to the Expiration Date, the Purchaser should decide to increase the price
per Share being offered in the Offer, such increase will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer. The
Merger Agreement provides that, without the Company's consent, the Purchaser
will not decrease the price or the number of Shares sought in the Offer. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
The Company has provided the Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the later to occur of (i)
the Expiration Date, (ii) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the purchase of Shares pursuant to the Offer having expired or been terminated
and (iii) the receipt of all necessary consents and approvals from each of the
U.S. Customs Service and the Bureau of Alcohol, Tobacco and Firearms applicable
to the purchase of Shares pursuant to the Offer. Subject to the applicable rules
of the SEC and the terms of the Merger Agreement, the Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any such regulatory approvals specified in Section 14,
including approval under the HSR Act. See Sections 14 and 15. The Purchaser
understands that, in accordance with the applicable rules of the SEC, any delay
in accepting Shares regardless of cause may not exceed an "unreasonable length
of time." Accordingly, if it appears at the time that the Offer is scheduled to
expire that the approval under the HSR Act specified in Section 14 hereof is not
likely to be obtained within a reasonable length of time thereafter, the
Purchaser will either extend the Offer or terminate the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares ("Stock Certificates") or timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company (each, a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the
4
<PAGE>
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance of
such Shares for payment. Payment for Shares accepted pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payments from the
Purchaser and transmitting payments to such tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted pursuant to the Offer for any
reason, or if Stock Certificates are submitted evidencing more Shares than are
tendered, Stock Certificates evidencing Shares not purchased or tendered will be
returned, without expense to the tendering stockholder (or in the case of Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, such Shares
will be credited to an account maintained at such Book-Entry Transfer Facility),
as promptly as practicable after the expiration, termination or withdrawal of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to Parent or to one or more of its affiliates, the
right to purchase all or a portion of the Shares tendered pursuant to the Offer,
but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in the
case of any book-entry transfer), and any other required documents, must be
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase prior to the Expiration Date. In addition, either (i) the
Stock Certificates evidencing Shares must be received by the Depositary along
with the Letter of Transmittal or Shares must be tendered pursuant to the
procedures for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date or
(ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date or the
tendering stockholder must comply with the guaranteed delivery procedures
described below.
5
<PAGE>
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate is not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then such Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on such Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
THE METHOD OF DELIVERY OF STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, or the procedures for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if all
the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary prior to the Expiration Date as provided below;
and
(iii) the Stock Certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by the
Depositary of (i) Stock Certificates evidencing such Shares or a Book-Entry
Confirmation of the delivery of such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
6
<PAGE>
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH TENDERING STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER ("TIN") AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING. IF A
STOCKHOLDER DOES NOT PROVIDE SUCH STOCKHOLDER'S CORRECT TIN OR FAILS TO PROVIDE
THE CERTIFICATIONS DESCRIBED ABOVE, THE INTERNAL REVENUE SERVICE MAY IMPOSE A
PENALTY ON SUCH STOCKHOLDER AND PAYMENTS THAT ARE MADE TO SUCH STOCKHOLDER WITH
RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER MAY BE SUBJECT TO BACKUP
WITHHOLDING AT A RATE OF 31%. ALL STOCKHOLDERS SURRENDERING SHARES PURSUANT TO
THE OFFER SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM AND THE SUBSTITUTE
FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL TO PROVIDE THE
INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP WITHHOLDING (UNLESS AN
APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER SATISFACTORY TO THE
PURCHASER AND THE DEPOSITARY). SEE INSTRUCTION 9 AND "IMPORTANT TAX INFORMATION"
IN THE LETTER OF TRANSMITTAL.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, subject to the Merger Agreement, to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to Shares of any particular stockholder, and the Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions thereto) will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as the stockholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of the Merger Agreement). All such proxies shall be considered
coupled with an interest in the tendered Shares. This appointment will be
effective when, and only to the extent that, the Purchaser accepts Shares for
payment. Upon acceptance for payment, all prior proxies given by the stockholder
with respect to the Shares or other securities will, without further action, be
revoked, and no subsequent proxies may be given nor any subsequent written
consent executed by such stockholder (and if given or executed, will not be
deemed to be effective) with respect thereto. The designees of the Purchaser
will, with respect to the Shares and other securities, be empowered to exercise
all voting and other rights of such stockholder as they in their sole discretion
may deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent or otherwise. The Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment of such Shares, the Purchaser must
be able to exercise full voting and other rights of a record and beneficial
holder, including rights in respect of acting by written consent, with respect
to such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
7
<PAGE>
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that Shares tendered pursuant to
the Offer may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after September 6, 1997, or at such later time as
may apply if the Offer is extended.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Stock Certificates, the serial numbers of the particular Stock
Certificates and a signed notice of withdrawal with signature guaranteed by an
Eligible Institution, except in the case of Shares tendered for the account of
an Eligible Institution, must also be furnished to the Depositary as described
above. If Shares have been tendered pursuant to the procedures for book-entry
transfer set forth in Section 3, any notice of withdrawal must also specify the
name and number of the account at the appropriate Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED NOT TO HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be re-tendered
by following one of the procedures described in Section 3 at any time prior to
the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for U.S. federal income tax law purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. The tax
consequences of such receipt pursuant to the Offer (or the Merger) may vary
depending upon, among other things, the particular circumstances of the
stockholder. In general, a stockholder who receives cash for Shares pursuant to
the Offer (or the Merger) will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such stockholder's adjusted tax basis in such Shares.
Provided that the Shares constitute capital assets in the hands of the
stockholder, such gain or loss will be capital gain or loss, and will be long
term capital gain or loss if the holder has held the Shares for more than one
year at the time of sale. Under present law, long term capital gains recognized
by an individual stockholder generally will be taxed at a maximum U.S. federal
marginal tax rate of 28%, and long term capital gains recognized by a corporate
stockholder will be taxed at a maximum U.S. federal marginal tax rate of 35%. In
addition, under present law, the ability to use capital losses to offset
ordinary income is limited.
A stockholder that tenders Shares may be subject to backup withholding at a
rate of 31% unless a TIN is provided by such stockholder and such stockholder
certifies that such number is correct or properly certifies that such
stockholder is awaiting a TIN, or unless an exemption applies. See "Backup
Federal Income Tax Withholding" under Section 3 and Instruction 9 and "Important
Tax Information" in the Letter of Transmittal.
8
<PAGE>
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER (OR THE MERGER) TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS. IN ADDITION, THE
DISCUSSION SET FORTH ABOVE MAY NOT APPLY TO PARTICULAR CATEGORIES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN CORPORATIONS,
LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS OR
ENTITIES THAT ARE OTHERWISE SUBJECT TO SPECIAL TAX TREATMENT.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares trade on the New York Stock Exchange (the "NYSE") under the
symbol "DFI". The following table sets forth, for the fiscal quarters indicated
the high and low sales price per Share on the New York Stock Exchange, as well
as dividends paid. All prices set forth are as reported in published financial
sources:
<TABLE>
<CAPTION>
MARKET PRICE
------------------
<S> <C> <C>
HIGH LOW
------- -------
Fiscal 1996:
First Quarter....... $ 8 7/8 $ 7
Second Quarter...... 10 5/8 7 3/8
Third Quarter....... 15 3/4 9
Fourth Quarter...... 16 3/4 13 1/8
Fiscal 1997:
First Quarter....... $15 1/8 $11 3/4
Second Quarter...... 17 1/4 12 1/2
Third Quarter....... 15 3/4 13 1/8
Fourth Quarter...... 17 7/8 13 1/8
Fiscal 1998:
First Quarter....... $15 3/4 $12 3/8
Second Quarter
(through July 8)... 23 7/8 13 7/8
</TABLE>
Cash dividends declared were approximately $6,536,000, or $0.24 per share,
and $5,450,000, or $0.20 per share, for the years ended January 26, 1997 and
January 28, 1996. The Company intends to pay quarterly dividends of $0.06 per
share during fiscal 1998.
On July 1, 1997, the last full trading day prior to the announcement of the
terms of the Merger Agreement, the reported closing sales price per Share on the
New York Stock Exchange was $20 1/8. On July 8, 1997, the last full trading day
prior to the commencement of the Offer, the reported closing sales price per
Share on the New York Stock Exchange was $23 13/16. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NYSE QUOTATION AND EXCHANGE
ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the standards
for continued inclusion in the NYSE, which require that an issuer have at least
600,000 publicly held shares (excluding shares held by officers, directors,
their immediate families and other concentrated holdings of 10% or more) with a
market value
9
<PAGE>
of $5 million held by at least 1,200 shareholders of at least 100 shares. If
these standards were not met, quotations might continue to be published in the
over-the-counter "additional list" or in one of the "local lists," but if the
number of holders of Shares falls below 300, or if the number of publicly held
Shares falls below 100,000, or if there are not at least two market makers for
the Shares, the National Association of Securities Dealers ("NASD") rules
provide that the securities would no longer be "authorized" for NYSE reporting
and NYSE would cease to provide any quotations. Shares held directly or
indirectly by an officer or director of the Company, or by any beneficial owner
of more than 10 percent of the Shares, ordinarily will not be considered as
being publicly held for this purpose. In the event the Shares were no longer
eligible for NYSE quotation, quotations might still be available from other
sources. The extent of the public market for the Shares and availability of such
quotations would, however, depend upon the number of holders of Shares remaining
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act, as described below, and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, following the Offer it
is possible that the Shares would no longer constitute "margin securities" for
the purpose of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 record holders of the Shares.
Termination of registration of the Shares under the Exchange Act would reduce
substantially the information required to be furnished by the Company to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions no longer applicable
to the Company. Furthermore, if the Purchaser acquires a substantial number of
Shares or the registration of the Shares under the Exchange Act were to be
terminated, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 under the Securities Act of 1933 may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated prior to the
consummation of the Merger, the Shares would no longer be "margin securities" or
be eligible for Nasdaq reporting. It is the present intention of the Purchaser
to seek to cause the Company to make an application for termination of
registration of the Shares as soon as possible following the Offer if the
requirements for termination of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or is based upon publicly
available documents and records on file with the SEC and other public sources.
Neither Parent nor the Purchaser assumes any responsibility for the accuracy or
completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which were unknown to Parent or the Purchaser.
10
<PAGE>
The Company is a Maryland corporation with its principal executive offices
located at 63 Copps Hill Road, Ridgefield, Connecticut 06877. The telephone
number of the Company at such offices is (203) 431-6057.
The Company operates in several distinct markets of the duty free industry
in the United States and abroad. This highly specialized industry sells
merchandise such as liquor, tobacco products, perfume and luxury gifts free of
all duties and sales and excise taxes to persons leaving the United States or
travelling on international airlines and to foreign diplomats serving in the
United States. The Company offers quality brand-name merchandise at savings
generally ranging from 20% to 60% off retail prices in the countries of its
customers' destinations.
The Company is the leading operator in the United States of duty free stores
along both the United States/Canada and the United States/Mexico borders and is
one of the leading operators of duty free and retail stores in international
airports in the United States and Puerto Rico, and is a prime concessionaire and
supplier of merchandise to international airlines' in-flight duty free shops.
The Company is also the largest supplier of duty free merchandise to foreign
diplomats in the United States and is a major supplier of merchandise to
merchant and cruise ships from ports in the Northeast United States and Miami,
Florida.
Set forth below is a summary of certain consolidated financial information
with respect to the Company, excerpted or derived from the information contained
in the Company's Annual Report on Form 10-K for the fiscal year ended January
26, 1997 and from its Quarterly Report on Form 10-Q for the fiscal quarter ended
April 27, 1997. More comprehensive financial information is included in such
reports and other documents filed by the Company with the SEC, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents may be inspected and copies
may be obtained from the offices of the SEC in the manner set forth below.
DUTY FREE INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA:
Net Sales............................................ $ 570,895 $ 515,058 $ 501,761 $ 376,436 $ 361,823
Gross Profit......................................... 249,162 218,885 200,374 147,740 146,425
Operating Income (Loss).............................. 39,653 30,346 (26,722) 39,535 49,647
Earnings (Loss) Before Income Taxes.................. 34,080 25,389 (31,149) 43,082 49,786
Net Earnings (Loss).................................. 21,470 15,996 (24,802) 27,393 30,373
Earnings (Loss) Per Share............................ $ 0.79 $ 0.59 $ (0.91) $ 1.01 $ 1.08
Dividends Per Common Share........................... $ 0.24 $ 0.20 $ 0.20 $ 0.20 $ 0.15
</TABLE>
<TABLE>
<CAPTION>
JANUARY 26, JANUARY 28, JANUARY 29, JANUARY 31, JANUARY 31,
1997 1996 1995 1994 1993
----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.............................. $ 415,348 $ 390,708 $ 387,142 $ 387,600 $ 255,819
Long-Term Obligations..................... 123,604 122,238 118,891 121,821 9,629
Stockholders' Equity...................... 227,715 212,482 201,151 231,861 207,343
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------
APRIL 27, APRIL 28,
1997 1996
----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................................. $ 133,047 $ 117,979
Gross Profit.............................. 56,991 50,801
Operating Income (Loss)................... 5,659 4,889
Earnings (Loss) Before Income Taxes....... 4,126 3,464
Net Earnings (Loss)....................... 2,599 2,182
Earnings (Loss) Per Share................. $ 0.10 $ 0.08
Dividends Per Common Share................ $ 0.06 $ 0.06
</TABLE>
<TABLE>
<CAPTION>
APRIL 27,
1997
-----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.............................. $ 420,811
Long-Term Obligations..................... 123,628
Stockholders' Equity...................... 228,822
</TABLE>
AVAILABLE INFORMATION. The Company is subject to the information filing
requirements of the Exchange Act and is required to file reports and other
information with the SEC relating to its business, financial condition and other
matters. Information, as of particular dates, concerning the Company's directors
and officers, their remuneration, options granted to them, the principal holders
of the Company's securities and any material interest of such persons in
transactions with the Company is required to be described in proxy statements
distributed to the Company's stockholders and filed with the SEC. These reports,
proxy statements and other information should be available for inspection and
copying at the SEC's office at 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection and copying at the regional offices
of the SEC located at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the SEC's customary fees, from the SEC's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains an internet
web site at http://www.sec.gov that contains reports, proxy statements and other
information. Copies should also be available at the office of the New York Stock
Exchange.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser is a newly incorporated Maryland corporation and a wholly
owned subsidiary of Parent. To date the Purchaser has not conducted any business
other than in connection with the Offer and the Merger. The principal executive
offices of the Purchaser are located c/o The Corporation Trust Incorporated, 32
South Street, Baltimore Maryland 21202.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
Parent is a corporation organized under the laws of England with its
principal office located at Stockley House, 130 Wilton Road, London SW1V 1LQ.
Until immediately prior to the time the Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that the Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer and
the Merger. Because the Purchaser is a newly formed corporation and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.
12
<PAGE>
Except as set forth in this Offer to Purchase, none of the Purchaser or
Parent (collectively, the "Purchaser Entities"), or, to the best knowledge of
any of the Purchaser Entities, any of the persons listed on Schedule I, has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any securities of the Company, joint ventures, loan or option
arrangement, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the SEC. Except as set forth in this Offer
to Purchase, there have been no contacts, negotiations or transactions between
the Purchaser Entities, or their respective subsidiaries or, to the best
knowledge of any of the Purchaser Entities, any of the persons listed on
Schedule I, and the Company or its affiliates, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
election of directors or a sale or other transfer of a material amount of
assets. Except as set forth in this Offer to Purchase, none of the Purchaser
Entities or, to the best knowledge of any of the Purchaser Entities, any of the
persons listed on Schedule I, beneficially owns any Shares or has effected any
transactions in the Shares in the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay related fees and expenses is
approximately $715 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger through loans from Parent which Parent will fund from
cash accounts and available lines of credit. No final decisions have been made
by Parent concerning the source of funds to be used for purchase of the Shares.
However, the Offer is not conditioned on obtaining financing.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In October 1996, Alfred Carfora, the President and Chief Executive Officer
of the Company met Barry Gibson, Group Retail Director of Parent at an industry
conference at which they discussed possible business combinations between the
Company and Parent. They agreed to meet again in January 1997 to continue such
discussions.
On January 6, 1997, Parent and the Company entered into confidentiality
agreements preceding Parent's review of certain information concerning the
Company and continued discussing different possible transactions including a
joint venture of the Company's and Parent's duty free retail operations, a
contribution of Parent's duty free retail operations to the Company in exchange
for shares of the Company's Common Stock and other possible combinations.
On April 19, Mr. Gibson asked Mr. Carfora whether the Company would be
willing to consider an offer by Parent to purchase all of the outstanding Shares
of the Company. The parties discussed matters that would need to be addressed in
connection with such a transaction, and Mr. Gibson advised Mr. Carfora that if
Parent were to proceed it would require the Company to enter into an exclusivity
agreement for a certain period of time.
During March and April 1997, the Company supplied Parent with certain
historical financial information and forecasts relating to the Company.
On April 25, Mr. Carfora met with representatives of Parent to discuss the
acquisition of the Company by Parent in a cash tender offer at a per share price
in the range of $21-23.
On May 2, representatives of Parent met with representatives of the Company
to discuss Parent's review of information concerning the Company.
13
<PAGE>
On May 7, the Company entered into an exclusivity agreement with Parent (the
"Exclusivity Agreement"), providing, among other things, that until May 30, the
Company would not initiate or solicit offers for a business combination from any
other person. Promptly thereafter, Parent commenced a due diligence review of
the Company's business, including non-public information provided by the
Company.
Between May 8 and May 17, representatives of Parent met with representatives
of the Company to discuss the Company's business, valuation parameters of the
Company and to discuss generally the terms and conditions of a possible
transaction, including Parent's requirement that the Selling Stockholders sign a
Shareholders Agreement providing for the sale of the Shares owned by them to
Parent, through a tender of such Shares in the Offer or otherwise and that the
Company enter into the Option Agreement with Parent.
On May 18, the Company advised Parent of the Company's receipt of an
expression of interest from another interested party, although the name of such
party was not disclosed at that time to Parent.
On May 23, representatives of Parent distributed the initial draft of the
Merger Agreement and related documents to the Company's representatives. The
draft Merger Agreement did not set forth any terms regarding the price to be
proposed by Parent, a subject which was left for discussion between the chief
executives of the Company and Parent.
On June 5, Parent informed the Company that Parent would not be in a
position to proceed with further discussions regarding the price range for any
possible business combination until after July 2.
On June 13, the Company provided Parent with comments on the proposed draft
of the Merger Agreement.
On June 18, Mr. Carfora suggested to Mr. Gibson that Parent should propose a
price of $26.00 per share. Mr. Gibson said he would need to discuss this price
with the directors of Parent. On June 23, representatives of the Company and
Parent reached a tentative understanding on a price per share in the range of
$23.00 to $25.00.
On June 28, Parent provided the Company with a revised draft of the Merger
Agreement.
On June 30, the Company provided to Parent its comments on the revised
Merger Agreement, as well as the Shareholders Agreement and the Option
Agreement, although an express stipulation was made by the Company that there
was no agreement that the Option Agreement and/or the Shareholders Agreement
would be entered into.
On July 1, representatives of the Company and Parent met to negotiate the
provisions of the Merger Agreement.
On July 2, further discussions were held by the representatives of the
Company and Parent with respect to the proposed price for the transaction. At
the conclusion of such discussions, the Parent proposed to acquire 100% of the
equity of the Company for $24 per share, conditioned upon the execution and
delivery of the Option Agreement by the Company and the Shareholders Agreement
by the Selling Stockholders. Revised drafts of the Merger Agreement, the Option
Agreement and the Shareholders Agreement were circulated by Parent and further
negotiation thereof among representatives of the Company and Parent ensued
throughout the day. Late in the day the Boards of Directors of the Company and
the Parent each unanimously approved the terms and conditions of the Offer,
including the terms and conditions of the Merger Agreement and the other
transaction documents contemplated thereby.
On the morning of July 3, the parties executed the Merger Agreement, dated
as of July 2, 1997, and publicly announced the transactions contemplated
thereby.
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12. PURPOSE OF THE OFFER, MERGER, MERGER AGREEMENT, SHAREHOLDERS AGREEMENT, AND
OPTION AGREEMENT
The purpose of the Offer, the Merger, the Merger Agreement, Shareholders
Agreement and Option Agreement is to enable Parent to acquire control of, and
the entire equity interest in, the Company. Upon consummation of the Merger, the
Company will become a subsidiary of Parent. The Shareholders Agreement is
intended to increase the likelihood that the Merger will be effected.
MERGER AGREEMENT. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement which is incorporated herein by reference and a copy of which
has been filed with the SEC as an exhibit to Parent's and the Purchaser's Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"). The Merger Agreement
may be examined and copies may be obtained at the places and in the manner set
forth in Section 8 of this Offer to Purchase.
THE OFFER. The Merger Agreement provides that, subject to the provisions of
the Merger Agreement, as promptly as practicable but in no event later than five
business days after the announcement of the execution of the Merger Agreement,
the Purchaser will commence the Offer and that, upon the terms and subject to
prior satisfaction or waiver of the conditions of the Offer, the Purchaser will
purchase all Shares validly tendered pursuant to the Offer. The Merger Agreement
provides that, without the written consent of the Company, the Purchaser will
not reduce the number of shares sought in the offer, reduce the Offer Price,
modify or add to the conditions of the Offer set forth in "Conditions to the
Offer" below or otherwise amend the Offer in any manner materially adverse to
the Company's stockholders, except as provided in the next two sentences, extend
the Offer or change the form of consideration payable in the Offer.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer for a period of not more than 10 business days
beyond the initial expiration date of the Offer (which initial expiration date
shall be 20 business days following commencement of the Offer), if on the date
of such extension less than 90% of the outstanding Shares have been validly
tendered and not properly withdrawn pursuant to the Offer, (ii) extend the Offer
from time to time if at the initial expiration date or any extension thereof the
Minimum Condition or any of the other conditions to the Purchaser's obligation
to purchase Shares set forth in paragraphs (a), (b) and (e) under "Conditions to
the Offer" below, shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (iii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer and (iv) extend the Offer for any reason
for a period of not more than 10 business days beyond the latest expiration date
that would otherwise be permitted under clauses (i), (ii) or (iii) of this
sentence. In addition, the Purchaser shall at the request of the Company extend
the Offer for five business days if at any scheduled expiration date of the
Offer any of the conditions to the Purchaser's obligation to purchase Shares
shall not be satisfied; PROVIDED, HOWEVER, that that the Purchaser shall not be
required to extend the Offer beyond December 31, 1997.
THE MERGER. The Merger Agreement provides that following the satisfaction
or waiver of the conditions described below under " Conditions to the Merger"
and in accordance with the MGCL, the Purchaser will be merged with the Company,
and each then outstanding Share (other than Shares owned by the Company or by
any subsidiary of the Company and Shares owned by Parent, the Purchaser or any
other subsidiary of Parent or held by stockholders, if any, who are entitled to
and who properly exercise dissenters' rights under the MGCL), will be converted
into the right to receive an amount in cash equal to the price per Share paid
pursuant to the Offer, without interest.
VOTE REQUIRED TO APPROVE MERGER. The MGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board of Directors and generally by the holders of the Company's
outstanding voting securities. The Board of Directors of the Company has
approved the Offer and the Merger, consequently, the only additional action of
the Company that may be necessary to effect the Merger is approval by such
stockholders if the "short-form" merger procedure
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described below is not utilized. Under the Company's Restated Certificate of
Incorporation, the affirmative vote of holders of a majority of the outstanding
Shares (including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares, it
would have sufficient voting power to effect the Merger without the vote of any
other stockholder of the Company. However, the MGCL also provides that if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a short-form merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a result
of the Offer or otherwise, the Purchaser acquires or controls the voting power
of at least 90% of the outstanding Shares, the Purchaser could ,if it elects to
do so, effect the Merger without any action by any other stockholder of the
Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger is
subject to the satisfaction or waiver of the following conditions: (1) if
required by applicable law, the Merger Agreement shall have been adopted by the
affirmative vote or consent of the holders of a majority of the outstanding
Shares in accordance with applicable law and the Company's Restated Certificate
of Incorporation, (2) the waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired, (3) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect; PROVIDED, HOWEVER, that each of the Company, the Purchaser and Parent
shall have used its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered and (4) the receipt of all necessary consents and approvals
from each of the U.S. Customs Service and the Bureau of Alcohol, Tobacco and
Firearms applicable to the purchase of shares pursuant to the Merger.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company, (1) by mutual written consent of the Company and the Purchaser, (2) by
either the Company or Parent if (a) the Purchaser shall not have purchased that
number of Shares which constitutes the Minimum Tender Condition pursuant to the
Offer prior to December 31, 1997, PROVIDED, HOWEVER, that the passage of such
period shall be tolled for any part thereof during which any party shall be
subject to a non final order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the purchase of Shares pursuant to the Offer or the
consummation of the Merger; or (b) if any Federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Government Entity"),
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the purchase of
Shares pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable, (3) by either Parent or
the Company if the Merger shall not have been consummated by April 30, 1998 or
such later date mutually agreed to by the parties; PROVIDED, HOWEVER, that the
passage of such period shall be tolled for any part thereof during which any
party shall be subject to a non final order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the purchase of shares of Common
Stock pursuant to the Offer or the consummation of the Merger; PROVIDED,
FURTHER, HOWEVER, that the right to terminate the Merger Agreement pursuant to
such clause shall not be available to any party whose failure to perform any
obligations under the Merger Agreement results in the failure of the Merger to
be consummated by such time; (4) by the Company if (a) the Board of Directors of
the Company approves or recommends a superior proposal under circumstances
described below in the second paragraph under "Takeover Proposals; No
Solicitation" and (b) the Company has paid to the Purchaser an amount in cash
equal to the sum of the Termination Fee (as defined below;), or (5) by the
Purchaser or Parent if the Purchaser terminates the Offer as a result of the
occurrence of any event set forth in paragraph (d), (f) and (g) of "Conditions
to the Offer" below; (6) by the Company if Purchaser terminates the Offer as a
result of the occurrence of any event set forth in paragraph (a), (b), (c), (e),
(f) or (g) of "Conditions to the Offer" below; (7) by the Company in the event
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the Company has convened a meeting of the Company's stockholders in accordance
with the Merger Agreement and the Merger and the Merger Agreement have not been
approved by the affirmative vote or consent of the holders of the requisite
number of outstanding shares of Common Stock in accordance with applicable law
and the Company's Restated Certificate of Incorporation; (8) by the Company if
Purchaser (a) shall have failed to commence the Offer within the time required
under the Exchange Act or (b) shall have failed to pay for any Common Stock
accepted for payment pursuant to the Offer and, in the case of Clause (c),
Purchaser shall have failed to make such payment within three business days of
receipt of written notice thereof from the Company; PROVIDED, HOWEVER, that any
such failure is not caused by a material breach by the Company; or (9) by the
Company if Parent or Purchaser fail to perform in any material respect any
provision of the Merger Agreement and Parent or Purchaser have failed to perform
such obligation or cure such breach within 10 business days of its receipt of
written notice from the Company and such failure to perform has not been waived
in accordance with the terms of the Merger Agreement; PROVIDED, HOWEVER, that
such failure to perform is not caused by a material breach by the Company.
TAKEOVER PROPOSALS; NO SOLICITATION. (a) The Company has agreed in the
Merger Agreement that, from and after the date of the Merger Agreement, the
Company will not, and will not permit any officer or director of the Company or
any officer or director of its subsidiaries to, and nor shall it authorize or
permit any officer, director or employee of, or any investment banker, attorney
or other advisor or representative of, the Company or any of its subsidiaries
to, (i) solicit or initiate the submission of, any Takeover Proposal (ii) except
as provided in (b) below, enter into any agreement with respect to any Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to any Takeover
Proposal, or take any other action to solicit or initiate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that prior to the acceptance for
payment of Shares pursuant to the Offer, the Company may, after taking into
account the advice of outside counsel, in response to an unsolicited written
bona fide Takeover Proposal which contains no financing condition from a person
that the Board of Directors of the Company (the "Company Board") reasonably
believes has the financial ability to make a Superior Proposal, subject to
compliance with the notification requirements described below in (c), furnish
non-public information with respect to the Company to such person pursuant to a
customary confidentiality agreement and participate in discussions or
negotiations with such person. For purpose of the Merger Agreement, "Takeover
Proposal" means any written proposal for a merger or other business combination
involving the Company or any of its subsidiaries or any proposal or offer to
acquire in any manner, directly or indirectly, more than 20% of the equity
securities of the Company or more than 20% of the Company's consolidated total
assets, other than the transactions contemplated by the Merger Agreement.
(b) Neither the Company Board nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board or any such
committee of the Offer, the Merger Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, the Company Board may approve or recommend (and,
in connection therewith withdraw or modify its approval or recommendation of the
Offer, the Merger Agreement or the Merger) a Superior Proposal. For purposes of
the Merger Agreement, "Superior Proposal" means a bona fide Takeover Proposal
which contains no financing condition made by a third party on terms which the
Company Board determines in its good faith judgment, after taking into account
the written advice of the Company's investment banker, to be more favorable to
the Company's stockholders than the Offer and the Merger.
(c) The Company has agreed to promptly advise Parent orally and in writing
of any Takeover Proposal or any inquiry with respect to or which it believes
would be reasonably likely to lead to any Takeover Proposal unless the Company
Board is advised by outside legal counsel that the furnishing of such advice
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would be inconsistent with the legal obligations of the Company Board. The
Company has agreed to keep Parent informed of the status of any such Takeover
Proposal or inquiry.
(d) The Merger Agreement provides that nothing in the provisions thereof
described above shall prevent the Company and the Company Board from complying
with Rule 14e-2 under the Exchange Act, or issuing a communication meeting the
requirements of Rule 14d-9(e) under the Exchange Act, with respect to any tender
offer or otherwise prohibit the Company from making any public disclosures
required by law or the requirements of the New York Stock Exchange; provided,
however, that the Company may not, except as permitted by (b) above, withdraw or
modify its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
FEES AND EXPENSES. The Merger Agreement provides that the Company shall pay
to Parent upon demand a fee of $20 million (the "Termination Fee") if (i) the
Purchaser or the Company terminates the Merger Agreement under the circumstances
described in clause 2(a) under "Termination of the Merger Agreement" as a result
of the failure of any condition set forth in paragraph (d) under "Conditions to
the Offer" below, (ii) (a) after the date of the Merger Agreement, any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have
publicly made a Takeover Proposal, (b) the Offer shall have remained open until
at least the scheduled expiration date immediately following the date such
Takeover Proposal is made (and in any event for at least ten business days
following the date such takeover proposal is made), (c) the Minimum Condition
shall not have been satisfied at the expiration of the Offer, (d) the Merger
Agreement shall thereafter be terminated by either the Purchaser or the Company
under the circumstances described in clause 2(a) under "Termination of the
Merger Agreement," and (e) the Board of Directors of the Company, within 10
business days after the public announcement of such Takeover Proposal, either
fails to recommend against acceptance of such Takeover Proposal by the Company's
stockholders or announces that it takes no position with respect to the
acceptance of such Takeover Proposal by the Company's stockholders or (iii) the
Merger Agreement is terminated under the circumstances described in clause (4)
or (5) under "Termination of the Merger Agreement." In the event the Merger
Agreement is terminated pursuant to clause 5 under "Termination of Merger
Agreement" as a result of any condition set forth in paragraph (f) of
"Conditions to the Offer", and provided that no Termination Fee is or would
become payable thereunder, the Company shall pay to Parent all of Parent's
expenses up to and including $1,000,000. In the event the Merger Agreement is
terminated, the Offer is terminated or the Merger does not occur, solely due to
a breach by Parent or the Purchaser of any of its covenants, agreements or
obligations under the Merger Agreement, without limitation of any other rights
or remedies available to the Company at law or in equity, Parent and the
Purchaser shall pay to the Company, upon demand, all expenses of the Company up
to and including $4,000,000.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that
during the period from the date of the Merger Agreement to the earlier of the
Effective Time and the appointment or election of the Purchaser's designees to
the Board of Directors of the Company pursuant to the terms of the Merger
Agreement (such earlier time, the "Control Time"), the Company shall, and shall
cause its subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as conducted prior
to the date of the Merger Agreement and, to the extent consistent therewith, use
all reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective Time. The
Merger Agreement further provides that, except as contemplated by the Merger
Agreement or otherwise approved in writing by Parent, during the period from the
date of the Merger Agreement to the Effective Time, the Company shall not, and
shall not permit any of its subsidiaries to, (1) (a) declare, set aside or pay
any dividends on (except for the regular quarterly dividends of $.06 per share),
or make any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly owned
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subsidiary of the Company to its parent, (b) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or (c)
purchase, redeem or otherwise acquire any shares of capital stock of the Company
or any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities; (2) issue,
deliver, sell, pledge or otherwise encumber any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities other than the issuance of Shares upon the exercise of
Stock Options outstanding on the date of the Merger Agreement in accordance with
their present terms; (3) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents; (4) acquire or agree to
acquire (a) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (b) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice; (5) sell, lease, license, mortgage or otherwise
encumber or subject to any lien (other than liens required by law) or otherwise
dispose of any of its properties or assets, except sales of inventory in the
ordinary course of business consistent with past practice; (6) (a) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or enter into
any arrangement having the economic effect of any of the foregoing, except for
short term borrowings incurred in the ordinary course of business consistent
with past practice and pursuant to existing agreements, or (b) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned subsidiary of the
Company; (7) make or agree to make any new capital expenditure or expenditures
not contemplated by the Company's current budget; (8) (a) grant to any officer
of the Company or any of its subsidiaries any increase in compensation, except
as was required under employment agreements in effect as of January 26, 1997,
(b) grant to any officer of the Company or any of its subsidiaries any increase
in severance or termination pay, except as was required under employment,
severance or termination agreements in effect as of January 26, 1997, (c) enter
into any employment, severance or termination agreement with any officer of the
Company or any of its subsidiaries or (d) amend any benefit plan in any respect;
(9) make any change in accounting methods, principles or practices materially
affecting the Company's assets, liabilities or business, except insofar as may
have been required by a change in generally accepted accounting principles; (10)
pay, discharge, settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms; (11) except in the ordinary course of business, modify, amend
or terminate any material note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or waive or release or assign any material
rights or claims; (12) make any material tax election or settle or compromise
any material income tax liability; or (13) authorize any of, or commit or agree
to take any of, the foregoing actions.
Pursuant to the Merger Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, take any action that would or that could
reasonably be expected to result in (1) any of its representations and
warranties set forth in the Merger Agreement that are qualified as to
materiality becoming untrue, (2) any of such representations and warranties that
are not so qualified becoming untrue in any material respect or (3) except as
otherwise permitted by the provisions of the Merger Agreement described above
under "Takeover Proposals; No Solicitation", any of the conditions to the Offer
or to the Merger not being satisfied.
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In addition, the Merger Agreement provides that the Company shall promptly
advise the Parent orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, would have, a material adverse effect on
the Company and its subsidiaries taken as a whole.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by Purchaser for, any Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of directors
on the Board of Directors of the Company as shall give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to at least that number of directors, rounded
up to the next whole number, which is the product of (a) the total number of
directors on the Board of Directors of the Company (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser plus the number of Shares otherwise owned by the Purchaser or any
other subsidiary of the Parent bears to (ii) the number of such Shares
outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be so elected. Subject to applicable law, the Company has agreed to
take all action requested by the Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company shall make such mailing with the mailing
of the Schedule 14D-9 (provided that the Purchaser shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to the Purchaser's designees). In connection
with the foregoing, the Company shall promptly, at the option of the Purchaser,
either increase the size of the Board of Directors of the Company or obtain the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to the Board of Directors
of the Company as provided above. The Merger Agreement also provides that the
provisions of this paragraph are in addition to and shall not limit any rights
which the Purchaser or any of its affiliates may have as a holder or beneficial
owner of Shares as a matter of law with respect to the election of directors or
otherwise.
STOCK OPTIONS. The Merger Agreement provides that as soon as practicable
following the consummation of the Offer, the Board of Directors of the Company
(or, if appropriate, any committee administering the Stock Plans) shall adopt
such resolutions or take such other actions as are required to adjust the terms
of all outstanding Stock Options to provide that, at the Effective Time, each
Stock Option outstanding immediately prior to the acceptance for payment of
Shares pursuant to the Offer shall be canceled in exchange for a cash payment by
the Company of, or can only be exercised for net cash equal to, an amount equal
to (i) the excess, if any, of (a) the price per Share to be paid pursuant to the
Offer over (b) the exercise price per Share subject to such Stock Option,
multiplied by (ii) the number of Shares for which such Stock Option shall not
theretofore have been exercised.
The Merger Agreement provides further that all Stock Plans shall terminate
as of the Effective Time and the provisions in any other benefit plan of the
Company providing for the issuance, transfer or grant of any capital stock of
the Company or any interest in respect of any capital stock of the Company shall
be terminated as of the Effective Time, and the Company shall ensure that
following the Effective Time no holder of a Stock Option or any participant in
any Stock Plan or any other benefit plan of the Company shall have any right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
INDEMNIFICATION. From and after the Effective Time, Parent and the
Surviving Corporation have agreed to indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses (including attorney's
fees and expenses), liabilities or judgments or amounts that are paid in
settlement (which settlement shall require the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed) of or in connection
with any claim, action, suit, proceeding or investigation (a "Claim") in which
an Indemnified Party is, or is threatened to be made,
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a party or a witness based in whole or in part on or arising in whole or in part
out of the fact that such person is or was an officer, director or employee of
the Company or any of its subsidiaries, whether such Claim pertains to any
matter or fact arising, existing or occurring at or prior to the Effective Time,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Effective Time (the "Indemnified Liabilities"), and (ii) all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to the Merger Agreement, the Merger, the Offer, the Operative
Agreements (as defined in the Merger Agreement) or the other transactions
contemplated by the Merger Agreement or by the Operative Agreements, in the case
of either clause (i) or (ii) to the full extent the Company would have been
permitted under Maryland law and its Restated Certificate of Incorporation and
Bylaws to indemnify such person (and Parent shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law and under such Restated Certificate of
Incorporation or Bylaws, upon receipt of any undertaking required by such
Restated Certificate of Incorporation, Bylaws or applicable law). The
obligations of Parent described above shall continue in full force and effect,
without any amendment thereto, for a period of not less than six years from the
Effective Time.
Parent and the Surviving Corporation have agreed to cause to be maintained
in effect for not less than six years from the Effective Time the current
policies of directors' and officers' liability insurance maintained by the
Company and its subsidiaries (provided that Parent and the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to the Indemnified Parties in all
material respects so long as no lapse in coverage occurs as a result of such
substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including, the Effective Time,
provided that, in the event that any Claim is asserted or made within such
six-year period, such insurance shall be continued in respect of any such Claim
until final disposition of any and all such Claims, provided, further, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the premiums paid as of the date
hereof by Parent for such insurance.
The obligations of Parent and the Surviving Corporation described above are
intended to benefit, and be enforceable against Parent and the Surviving
Corporation directly by, the Indemnified Parties, and shall be binding on all
respective successors of Parent and the Surviving Corporation.
REASONABLE NOTIFICATION. The Merger Agreement provides that, on the terms
and subject to the conditions of the Merger Agreement, each of the parties shall
use its reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the Merger
and the other transactions contemplated by the Merger Agreement.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Merger
Agreement provides that in the event the Purchaser's designees are appointed or
elected to the Board of Directors of the Company as described above under "Board
of Directors," after the acceptance for payment of Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Directors (other than Purchaser's designees or appointees) shall be required for
the Company to amend or terminate the Merger Agreement, exercise or waive any of
its rights or remedies under the Merger Agreement or extend the time for
performance of the Purchaser's and Parent's respective obligations under the
Merger Agreement.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, employee benefit plans, labor
relations and employment matters, compliance with laws, subsidiaries, tax
matters, litigation, vote required to approve the Merger Agreement, undisclosed
liabilities, information supplied, the absence of any material adverse changes
in the Company since January 26, 1997, absence of excess parachute
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payments, inapplicability of state takeover statutes, the opinion of the
Company's financial advisor, brokers, fees and expenses, intellectual property,
environmental protection, and contracts.
THE SHAREHOLDERS AGREEMENT. As an inducement and a condition to entering
into the Merger Agreement, Parent required that the Selling Stockholders agree,
and the Selling Stockholders agreed, to enter into the Shareholders Agreement.
The following is a summary of the material terms of the Shareholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the SEC as an exhibit to the Schedule 14D-1. The Shareholders
Agreement may be examined, and copies thereof may be obtained, as set forth in
Section 8 above.
TENDER OF SHARES. Upon the terms and subject to the conditions of the
Shareholders Agreement, each Selling Stockholder has agreed to validly tender
(and not to withdraw) pursuant to and in accordance with the terms of the Offer,
not later than the fifth business day after commencement of the Offer, the
number of Shares set forth opposite such stockholder's name on Schedule I to the
Shareholders Agreement and beneficially owned by him, her or it. Each Selling
Stockholder has acknowledged and agreed that Purchaser's obligation to accept
for payment and pay for Shares in the Offer is subject to the terms and
conditions of the Offer.
VOTING. Each Selling Stockholder has agreed that during the period
commencing on the date of the Shareholders Agreement and continuing until the
first to occur of the purchase of Shares by Purchaser pursuant to the Offer the
Effective Time or termination of the Merger Agreement in accordance with its
terms, at any meeting of the Company's stockholders, however called, or in
connection with any written consent of the Company's stockholders, such Selling
Stockholder will vote (or cause to be voted) the Shares held of record or
beneficially owned by such Selling Stockholder, whether issued, heretofore owned
or hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and the
Shareholders Agreement and any actions required in furtherance thereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or the Shareholders Agreement (after
giving effect to any materiality or similar qualifications contained therein);
and (iii) except as otherwise agreed to in writing in advance by Parent, against
the following actions (other than the Merger and the transactions contemplated
by the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Restated Certificate of Incorporation or By-Laws; (3)
any other material change in the Company's corporate structure or business; or
(4) any other action involving the Company or its subsidiaries which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by the Shareholders Agreement and the Merger Agreement. Each
Selling Stockholder further agreed not to enter into any agreement or
understanding with any person or entity, the effect of which would be
inconsistent or violative of the provisions and agreements described above.
REPRESENTATIONS, WARRANTIES, COVENANTS AND OTHER AGREEMENTS. Each Selling
Stockholder has made certain customary representations, warranties and
covenants, including with respect to (i) ownership of the Shares to be tendered
by it or him, (ii) the authority to enter into and perform its or his
obligations under the Shareholders Agreement, (iii) the absence of required
consents or contractual conflicts relating to the Shareholders Agreement, (iv)
the absence of liens and encumbrances on and in respect of its or his Shares
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to be tendered by it or him, (v) no finder's fees, (vi) the solicitation of
Acquisition Proposals, (vii) transfers of Shares, (viii) waiver of appraisal
rights and (ix) further assurances.
TERMINATION. Other than as provided therein, the covenants and agreements
contained in the Shareholders Agreement will terminate upon the earlier of (x)
the Effective Time, (y) if the Effective Time does not occur, the termination of
the Merger Agreement or the withdrawal or modification by the Board of Directors
of the Company of its recommendation of the Offer or the Merger as permitted by
the Merger Agreement and (z) the first anniversary of the date of the
Shareholders Agreement.
THE OPTION AGREEMENT. Simultaneously with the execution of the Merger
Agreement, Parent and the Company entered into the Option Agreement as a
condition to Parent's willingness to proceed with the Offer. The Option
Agreement provides for the grant by the Company to Parent of an irrevocable
option to purchase up to 5,434,367 Option Shares at a price of $24 per Option
Share. The Option Agreement provides that the Option may be exercised by Parent,
in whole or in part, at any time or from time to time, commencing upon the
Option Exercise Date (as defined below) and prior to the Option Expiration Date
(as defined below). "Option Exercise Date" is defined in the Option Agreement as
the first to occur of any of the following dates: (i) any corporation (including
the Company or any of its subsidiaries or affiliates), partnership, person,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or any of its subsidiaries (collectively, "Persons") shall have
become the beneficial owner of more than 20% of the outstanding Shares and the
Merger Agreement is terminated pursuant to its terms; (ii) (x) any Person has
commenced, publicly proposed or communicated to the Company a proposal which
constitutes, or may reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any equity interest in, the
Company or any of its subsidiaries or any tender offer (including a self tender
offer) or exchange offer, merger, consolidation, business combination, sale of
substantially all assets, sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries for consideration having a value greater than the aggregate
consideration to be received by holders of Shares pursuant to the Offer and (y)
the Merger Agreement is terminated pursuant to its terms; "Option Expiration
Date" is defined in the Option Agreement as the first to occur of any of the
following dates: (w) the satisfaction of the Minimum Condition, (x) 120 days
after the later of (i) the termination of the Merger Agreement in accordance
with its terms and (ii) the expiration or termination of the applicable waiting
period under the HSR Act applicable to the exercise of the Option; (y) December
31, 1997; or (z) the date on which written notice of termination of the Merger
Agreement is made by Parent to the Company.
The Option Agreement provides that if the Option is exercised and if Parent
has requested in writing on or before December 31, 1997, the Company will use
its reasonable efforts to effect the registration under the Securities Act of
1933, as amended, of such number of Shares owned by Parent and its subsidiaries
as Parent may request and to keep such registration statement effective for a
period of not less than one year, unless, in the written opinion of counsel to
the Company, such registration is not required in order to lawfully sell and
distribute such Shares in the manner contemplated by Parent. The Company has no
obligation thereunder after two registrations pursuant to the Option Agreement
have been effected.
Parent may exercise the Option and purchase Option Shares pursuant to the
Option Agreement only if (i) such purchase would not otherwise violate, or cause
the violation of, any applicable law or regulation (including, without
limitation, the HSR Act or the rules of the NYSE), and (ii) no United States or
U.K. statute, rule, regulation, decree, order or injunction has been
promulgated, enacted, entered into or enforced by any United States or U.K.
government, governmental agency or authority or court which prohibits delivery
of the Option Shares, whether temporary, preliminary or permanent (PROVIDED,
HOWEVER, that Parent and the Company have agreed to use their best efforts to
have any such order, decree or injunction vacated or reversed).
The Option Agreement contains customary representations and warranties by
the Company and Parent.
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CONFIDENTIALITY AGREEMENTS
COMPANY CONFIDENTIALITY AGREEMENT. Pursuant to a Confidentiality Agreement
entered into as of January 6, 1997 by Parent and the Company (the "Company
Confidentiality Agreement"), the parties agreed to provide, among other things,
for the confidential treatment of their discussions regarding the Offer and the
Merger and the exchange of certain confidential information concerning the
Company. Parent also agreed, for a two year period commencing on the date of the
Confidentiality Agreement, without the prior written approval of the Company,
not to (i) in any manner acquire, agree to acquire or make any proposal to
acquire, directly or indirectly, any securities or direct or indirect rights to
acquire any securities of the Company or any of its subsidiaries, (ii) propose
to enter into, directly or indirectly, any merger or business combination
involving the Company or any of its subsidiaries or to purchase, directly or
indirectly, a material portion of the assets of the Company or any of its
subsidiaries, (iii) make, or in any way participate, directly or indirectly, in
any "solicitations" of "proxies" (as such terms are used in the proxy rules of
the SEC) to vote, or seek to advise or influence any person with respect to the
voting of, any securities of the Company or any of its subsidiaries, (iv) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any securities of the Company or
any of its subsidiaries, (v) otherwise act, alone or in concert with others, to
seek to control or influence the management, Board of Directors or policies of
the Company, (vi) disclose any intention, plan or arrangement inconsistent with
the foregoing, or (vii) advise, assist or encourage any other persons in
connection with any of the foregoing. The Company Confidentiality Agreement may
be examined and copies may be obtained at the places and in the manner set forth
under the heading "Available Information" in Section 8 of this Offer to
Purchase.
PARENT CONFIDENTIALITY AGREEMENT. Pursuant to a Confidentiality Agreement
entered into as of January 6, 1997 by Parent and the Company (the "Parent
Confidentiality Agreement") , the Company agreed, among other things, to treat
as confidential certain information and documents concerning Parent to be
provided to the Company in connection with the transactions contemplated by the
Merger Agreement. The Company also agreed that until the expiration of two years
from the date of the Parent Confidentiality Agreement it would not, and would
ensure that its associates (as defined in Section 435 of the English Insolvency
Act of 1986), advisors and certain other related persons would not, without the
prior written approval of the Parent (i) in any manner acquire, agree to acquire
or make any proposal to acquire, directly or indirectly, any securities or
direct or indirect rights to acquire any securities of Parent or any of its
subsidiaries, (ii) propose to enter into, directly or indirectly, any merger or
business combination involving the Parent or any of its subsidiaries or to
purchase, directly or indirectly, a material portion of the assets of the Parent
or any of its subsidiaries, (iii) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors or
policies of the Company, (iv) disclose any intention, plan or arrangement
inconsistent with the foregoing, or (v) advise, assist or encourage any other
persons in connection with any of the foregoing. The Parent Confidentiality
Agreement may be examined and copies may be obtained at the places and in the
manner set forth under the heading "Available Information" in Section 8 of this
Offer to Purchase.
OTHER MATTERS. Under the Company's Restated Certificate of Incorporation,
the affirmative vote of holders of a majority of the outstanding Shares entitled
to vote, including any Shares owned by the Purchaser, would be required to adopt
the Merger. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding Shares, which would
be the case if the Minimum Condition were satisfied, it would have sufficient
voting power to effect the Merger without the vote of any other stockholder of
the Company. The MGCL provides that if a parent company owns at least 90% of
each class of stock of a subsidiary, the parent company can effect a merger with
the subsidiary without the authorization of the other stockholders of the
subsidiary. Accordingly, if, as a result of the Offer, the Shareholders
Agreement or otherwise, the Purchaser acquires at least 90% of the outstanding
Shares, the Purchaser could, effect the Merger without approval of any other
stockholder of the Company.
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No appraisal rights are available in connection with the Offer. Appraisal
rights with respect to the Shares will not be available in connection with the
Merger if, among other things, the Shares are listed on a national securities
exchange or are designated as national market system securities on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. on the record date for determining stockholders entitled to vote on the
Merger. See "Section 7--Certain Effects of the Transaction." If such appraisal
rights become available, a holder of Shares will have such rights with respect
to the Merger if such holder properly exercises his appraisal rights under the
MGCL and the Merger is consummated (the "Merger Dissenter"). If the right to
receive fair value is applicable and the statutory procedures for exercising or
perfecting dissenters' appraisal rights are complied with in accordance with the
MGCL, then generally a judicial determination will be made of the fair value
required to be paid in cash to the Merger Dissenters for their Shares. Any such
judicial determination of the fair value of Shares may not include any
appreciation or depreciation which directly or indirectly results from the
Merger and could be based upon considerations other than or in addition to the
price paid pursuant to the Offer or the market value of the Shares. Fair value
may be more or less than the price paid pursuant to the Offer.
An objecting stockholder shall cease to have any rights as a stockholder
with respect to the Shares except the right to receive payment of the fair value
thereof. The stockholder's rights may be restored only upon the withdrawal, with
the consent of the Company, of the demand for payment, no filing of a petition
for appraisal within the time required, a determination of the court that the
stockholder is not entitled to an appraisal, or the abandonment or rescission of
the transaction to which the stockholder objected.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenter appraisal rights. The
preservation and exercise of dissenters' rights are conditioned on strict
adherence to the applicable provisions of the MGCL.
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to
certain "going private" transactions and which may under certain circumstances
be applicable to the Merger or another business combination following the
purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire
the remaining Shares not held by it. The Purchaser believes, however, that Rule
13e-3 will not be applicable to the Merger because it is anticipated that the
Merger will be effected within one year following consummation of the Offer.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the SEC and disclosed to stockholders prior to
consummation of the transaction.
The Purchaser or an affiliate of the Purchaser may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. The Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them.
Upon the completion of the Offer, Parent intends to conduct a detailed
review of the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider what, if any, changes would be desirable in light of the circumstances
which then exist. Such changes could include changes in the Company's business,
corporate structure, charter, by-laws, capitalization, Board of Directors,
management or dividend policy, although Parent has no current plans with respect
to any of such matters, except as described in this Offer to Purchase.
Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving the Company or any of
its subsidiaries, or any material changes in the Company's corporate structure,
business or composition of its management or personnel.
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13. DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, prior to the
Effective Time, the Company will not, except as explicitly permitted by the
Merger Agreement, (i) declare, set aside or pay any dividend (except for the
regular quarterly dividends of $.06 per share) or make any other distributions
in respect of, any of its capital stock, other than dividends and distributions
by any direct or indirect wholly owned subsidiary of the Company to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities.
14. CONDITIONS TO THE OFFER
Notwithstanding any other terms of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer, unless (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which would represent at least a majority of the Shares
outstanding on a fully diluted basis and (ii) any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated. Furthermore, notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject as aforesaid, to pay for any Shares not theretofore accepted
for payment or paid for, and may terminate the Offer if, at any time on or after
the date of the Merger Agreement and before the acceptance of such shares for
payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity (including, without limitation, the Department of
the Treasury, the U.S. Customs Service and the Bureau of Alcohol, Tobacco
and Firearms) or any other person (in the case of any suit, action or
proceeding by a person other than a Governmental Entity, such suit, action
or proceeding having a reasonable likelihood of success) (i) challenging the
acquisition by Parent or the Purchaser of any Shares, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement, or seeking to obtain from the Company, Parent or the Purchaser
any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or
hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, as a result of the Offer or
any of the other transactions contemplated by the Merger Agreement, (iii)
seeking to impose limitations on the ability of Parent or the Purchaser to
acquire or hold or exercise full rights of ownership of, any Shares,
including the right to vote the Shares purchased by it on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company or its
subsidiaries, or (v) which otherwise is reasonably likely to prevent
consummation of the transactions contemplated by the Merger Agreement;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued (each of the
foregoing, a "Legal Event") with respect to, or deemed applicable to, or any
consent or approval withheld with respect to, (i) Parent, the Company or any
of their respective subsidiaries or (ii) the Offer, the Merger or any of the
other transactions contemplated by the Merger Agreement by
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any Governmental Entity or before any court or governmental authority,
agency or tribunal, domestic or foreign, that has a substantial likelihood
of resulting, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) since the date of the Merger Agreement there shall have occurred any
material adverse change or any development that, insofar as reasonably can
be foreseen, is reasonably likely to result in a material adverse change in
the business, properties, assets, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries taken
as a whole other than changes resulting from currency exchange rate
fluctations, customs, tax and duty law changes and changes relating to the
economy in general and to the Company's industry in general and not
specifically relating to the Company or any of its subsidiaries;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to do any of the foregoing;
(e) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or on
the London Stock Exchange, for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States (whether or not mandatory), (iii) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or involving the
United Kingdom and, in the case of armed hostilities involving the United
Kingdom, having, or which could reasonably be expected to have, a
substantial continuing general effect on business and financial conditions
in the United Kingdom, (iv) any limitation (whether or not mandatory) by any
United States or the United Kingdom governmental authority on the extension
of credit generally by banks or other financial institutions, or (v) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(f) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time and
the failure to be so true and correct in any material respect is a Company
Material Adverse Effect (as defined in the Merger Agreement), and except
with respect to representations and warranties made as of an earlier time;
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement and such failure would result in a Company Material Adverse
Effect (as defined in the Merger Agreement); or
(h) the Merger Agreement shall have been terminated in accordance with
its terms,
Subject to the provisions of the Merger Agreement set forth under "The
Offer" above, the foregoing conditions (i) may be asserted by Parent and the
Purchaser regardless of the circumstances giving rise to such condition and (ii)
are for the sole benefit of Parent and the Purchaser and may be waived by Parent
or the Purchaser, in whole or in part at any time and from time to time in the
sole discretion of Parent or the Purchaser. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
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15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings by the Company with the SEC and other publicly available
information concerning the Company, the Purchaser is not aware of any regulatory
license or permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer or, except as set
forth below, of any approval or other action by any governmental, administrative
or regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by the Purchaser pursuant to the Offer.
Should any such approval or other action be required, the Purchaser currently
contemplates that it will be sought. While the Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that adverse consequences might not result to
the Company's business or that certain parts of the Company's business might not
have to be disposed of in the event that such approvals were not obtained or any
other actions were not taken. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14.
MARYLAND STATE TAKEOVER LAWS. Subtitle 6 of Title 3 of the MGCL (the
"Maryland Business Combination Law") prohibits certain "business combinations"
(including certain mergers, consolidations, share exchanges, sales or
disposition of assets, issuances of stock, liquidations, reclassifications and
benefits from the corporation, including loans or guarantees) between a Maryland
corporation and any interested shareholder (defined generally as any person who,
directly or indirectly, beneficially owns 10 percent or more of the outstanding
voting power of the stock of the corporation or an affiliate of the corporation
that, at any time within the two-year period prior to the date in question, was
the beneficial owner of ten percent or more of the voting power of the
corporation's outstanding voting stock) for five years after the most recent
date on which the interested shareholder became an interested shareholder. After
such five-year period, any such business combination must be approved by a super
majority shareholder vote, unless, among other conditions, the corporation's
common stockholders receive a minimum price (as calculated in the MGCL) for
their shares in cash or in the same form as previously paid by the interested
shareholder for its shares. These provisions of the MGCL do not apply to a
business combination with an interested shareholder that is approved or exempted
therefrom by the board of directors of the corporation prior to the date on
which the interested shareholder became such. The Company's Board of Directors
has approved the Offer, the Merger, the Merger Agreement, the Option Agreement
and the Shareholders Agreement. Accordingly, the Maryland Business Combination
Law is inapplicable to the transactions contemplated thereby.
Subtitle 7 of Title 3 of the MGCL (the "Maryland Control Share Act")
generally prohibits an acquiring person from voting control shares (as described
below) of a Maryland corporation acquired pursuant to a control share
acquisition (as described below), unless voting rights for such shares shall
have been approved by the shareholders of the corporation by the affirmative
vote of two-thirds of all votes entitled to be cast (other than interested
shares, as described below) or unless the corporation's charter or by-laws
contain a provision, adopted prior to the acquisition, permitting the
acquisition of such shares. "Control shares" generally means shares of a
corporation acquired by a person within any of the following ranges of voting
power: (i) one-fifth or more, but less than one-third of all voting power; (ii)
one-third or more, but less than a majority of all voting power; or (iii) a
majority or more of all voting power. "Control share acquisition" generally
means the acquisition of, ownership of, or the power to direct the exercise of
voting power with respect to, control shares, but does not include the
acquisition of shares in a merger, consolidation or share exchange to which the
corporation is a party. "Interested shares" generally means shares of a
corporation in respect of which an acquiring person, an officer of the
corporation or an employee of the corporation who is also a director of the
corporation is entitled to exercise voting power in
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the election of directors. The Company's By-laws exempt any acquisition of
shares of stock of the Company from the Maryland Control Share Act.
STATE TAKEOVER STATUTES. A number of states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes. To
the extent that certain provisions of these statutes purport to apply to the
Offer, the Purchaser believes that there are reasonable bases for contesting
such statutes. If any person should seek to apply any state takeover statute,
the Purchaser would take such action as then appears desirable, which action may
include challenging the validity or applicability of any such statute in
appropriate court proceedings. If it is asserted that one or more takeover
statutes apply to the Offer, and it is not determined by an appropriate court
that such statute or statutes do not apply or are invalid as applied to the
Offer, the Purchaser might be required to file certain information with, or
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to purchase or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for payment or pay for Shares tendered.
UNITED STATES ANTITRUST. The Offer, the Merger and the acquisition of
Shares pursuant to the Shareholder Agreements are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission ("FTC") and certain waiting period requirements have been satisfied.
Parent intends to promptly file a Notification and Report Form with respect to
the Offer, the Merger and the purchase of Shares pursuant to the Stockholder
Agreement.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent, unless Parent
receives a request for additional information or documentary material, or the
Antitrust Division and the FTC terminate the waiting period prior thereto. If,
within such 15-day period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.
The provisions of the HSR Act would similarly apply to any purchase of the
Shares subject to the Shareholders Agreement pursuant to the Shareholder
Agreement (other than purchases effected through a tender pursuant to the Offer
or purchases pursuant to the Shareholders Agreement occurring after the
expiration of the 15-day waiting period connected to the Offer). If, as is
expected, the purchase of Shares permitted by the Shareholders Agreement is
effected through a tender of such Shares pursuant to the Offer or pursuant to
the Shareholders Agreement after the expiration of the 15-day waiting period
connected to the Offer, the HSR requirements applicable to the Offer described
in the prior paragraph would apply.
29
<PAGE>
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer, the Merger and the Shareholders Agreement. At any time
before or after the Purchaser's acquisition of Shares, the Antitrust Division or
the FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Parent and the Company are engaged, Parent and the Purchaser believe that
the acquisition of Shares by the Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by the Purchaser on antitrust grounds will not be made or,
if such a challenge is made, of the result. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions. The Purchaser has been advised that early
termination has been granted by the FTC with respect to the HSR Act filling.
U.S. CUSTOMS SERVICE; BUREAU OF ALCOHOL, TOBACCO AND FIREARMS. The Company
holds certain bonds and permits necessary for the operation of its business from
the U.S. Customs Service and the Bureau of Alcohol, Tobacco and Firearms (the
"Bureau"). The U.S. Customs Service or the Bureau may seek to revoke or refuse
to grant or renew a permit or bond if either governmental authority does not
approve a person who acquires ten percent or more of the outstanding shares of
the Company's Common Stock. The Company's Restated Certificate of Incorporation
provides that in the event a stockholder owning shares representing more than
nine percent of the outstanding Shares fails to cooperate fully with the Company
in complying with reporting requirements imposed by the U.S. Customs Service or
Bureau or when such stockholder's ownership causes these governmental
authorities to revoke or refuse to grant or renew without material change bonds
or permits necessary with the Company in complying with reporting requirements
imposed by the U.S. Customs Service or Bureau or when such stockholder's
ownership causes these governmental authorities to revoke or refuse to grant or
renew without material change bonds or permits necessary for the operation of
the Company' s business, the Company may redeem, at fair market value or require
prompt disposal of all or any portion of, the shares of the Company's Common
Stock owned by such stockholder. The Purchaser will not accept for payment
Shares tendered pursuant to the Offer if the U.S. Customs Service and/or the
Bureau have objected to the Offer and Merger. The Purchaser has informally
advised staff members of the U.S. Customs Service and the Bureau of the Offer
and the proposed Merger and neither staff has indicated any objection to the
Offer and the Merger based on such informal advice. Based upon such contacts to
date, the Purchaser does not expect the U.S. Customs Service or the Bureau to
object to the Offer or the Merger.
16. FEES AND EXPENSES
The Purchaser has retained Gleacher NatWest Inc. to act as the Dealer
Manager, MacKenzie Partners, Inc. to act as the Information Agent and IBJ
Schroder Bank & Trust Company to act as the Depositary in connection with the
Offer. The Dealer Manager and the Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers, commercial banks, trust companies and other nominees
to forward the Offer material to beneficial owners. The Information Agent and
the Depositary each will receive reasonable and customary compensation for their
services and will be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws. The Information Agent and the Depositary will be reimbursed for certain
reasonable out-of-pocket expenses. Parent has agreed to pay Gleacher NatWest
Inc. and NatWest Markets Corporate Advisory Limited a retainer fee in an
aggregate
30
<PAGE>
amount of L50,000 (approximately $84,500) payable per month in arrears
commencing April, 1997 and a success fee of L2,880,000 (approximately
$4,867,000) which is payable upon the completion of the Offer. Any retainer fees
paid and payable will be credited against the success fee. Gleacher NatWest Inc.
is not entitled to receive any separate fee for its services as Dealer Manager.
Parent has also agreed to reimburse Gleacher NatWest Inc. and NatWest Markets
Corporate Advisory Limited for reasonable out of pocket expenses and to
indemnify them against certain liabilities and expenses, including certain
liabilities under the Federal securities laws. None of the Dealer Manager, the
Information Agent or the Depositary has been retained to make solicitations or
recommendations in connection with the Offer. Neither Parent nor the Purchaser
will pay any fees or commissions to any broker or dealer or other person (other
than the Information Agent) for soliciting tenders of Shares pursuant to the
Offer. Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Purchaser for reasonable expenses incurred by them in forwarding material
to their customers.
17. MISCELLANEOUS
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not be in compliance
with applicable law, the Purchaser will make a good faith effort to comply with
any such law. If, after such good faith effort, the Purchaser cannot comply with
any such law, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares residing in such jurisdiction. In those
jurisdictions whose securities or blue sky laws require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or by one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the SEC the Schedule 14D-1 pursuant to Rule
14d-3 under the Exchange Act, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and
any amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth under the
heading "Available Information" in Section 8 (except that they will not be
available at the regional offices of the SEC).
W&G ACQUISITION CORPORATION
July 9, 1997
31
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, age and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of Parent. Each such person is a citizen of the
United Kingdom, unless otherwise indicated, and, except as otherwise noted, the
business address of each such person is c/o BAA plc, 130 Witton Road, London
SW1V 1LQ, England. Unless otherwise indicated, each occupation set forth first
under "Present Principal Occupation or Employment" refers to Employment with
Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Dr. N. Brian Smith CBE (68) Non Executive Chairman since August 1991. Non Executive Chairman of Cable &
Wireless plc, Mercury House, Theobald's Road, London WC1, since November
1995. Non Executive Chairman of Hong Kong Telecommunications Ltd, 42nd
Floor, Telecom Tower, Taikoo Place, 979 Kings Road, Quarry Bay, Hong Kong,
since November 1995. Non Executive Chairman of Hydron Limited, Hawley Lane,
Farnborough, Hampshire GU14 8EQ, since May 1994. Non Executive Chairman of
Heatherwood & Wexham Park Hospitals Trust, Wexham, Slough, SL2 4HL, since
1991. Director of Oxford Diocesan Board of Finance, Diocesan Church House,
North Hinksey, Oxford OX2 0NB, since April 1990. Deputy Chairman 1990/1991
and Chairman 1991/1994 of Lister & Co. plc, Prospect Mills, Longwood,
Huddersfield HD3 4UT; Non Executive Director, Berisford International plc,
1 Baker Street, London W1M 1AA, 1990-1996. None Executive Director, Mercury
Communications Ltd, New Mercury House, 26 Red Lion Square, London WC1R 4HQ,
1990-1993.
Sir John Egan (57) Chief Executive since September 1990. Non Executive Chairman of The London
Tourist Board, 26 Grosvenor Gardens, London SW1W 0DU, since January 1994.
Non Executive Vice Chairman of Legal & General plc, Temple Court, 11 Queen
Victoria Street, London EC4N 4TT, since May 1994. Non Executive Director of
The Foreign & Colonial Investment Trust PLC, Exchange House, Primrose
Street, London EC2 since May 1994. Non Executive Director of World Travel &
Tourism Council, 20 Grosvenor Place, London SW1X 7TT, since March 1994. Non
Executive Director of Marketing Council, Moor Hall, Cookham, Maidenhead,
Berkshire SL6 9QH, since October 1995.
Marcus Agius (50) Non Executive Director since August 1995. Vice Chairman of Lazard Brothers
& Co Limited, 21 Moorfields, London EC2P 2HT, since 1990. Non Executive
Director of Credit Agricole Lazard Financial Products Limited, 135 Fleet
Street, London EC4A 2ED, since March 1995.
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Dr. Tony C. Burrel CB (64) Non Executive Director since August 1994. Chief Executive of Offshore
Division of Health & Safety Executive, 2 Southwark Bridge, London SE1, from
December 1990 to June 1994.
G. Gordon Edington (51) Group Property Director since 1991 and Chairman of BAA International since
February 1992. Vice President of the British Property Federation since May
1997. Chairman of the Public Art Development Trust, Kirkman House, 12-14
Whitfield Street, London W1P 5RD, since January 1992.
Richard L. Everitt (48) Group Strategy & Compliance Director since 1991. Director of the Airport
Operators Association, 3 Birdcage Walk, London SW1, since March 1994.
Director of Discovery Inns PLC, Discovery House, 502 Worle Parkway, Worle,
Weston-Super-Mare, North Somerset BS22 OWA, October 1996-April 1997.
J.M. Barry Gibson (45) Group Retail Director, since October 1995. Director of Limelight Group plc,
2 Brindley Road, Old Trafford, Manchester MI6 9HQ, since October 1996.
Director Fitesse (Health & Fitness) Clubs Ltd, 1987-1994.
Mike S. Hodgkinson (53) Group Airports Director since 1992. Non Executive Director of Molins PLC,
11 Tanners Drive, Blakelands, Milton Keynes MK14 5LU since August 1994.
Director of Airports Council International, PO Box 125, 1215 Geneva 15,
Switzerland, since August 1994. Member of West London Training & Enterprise
Council, Sovereign Court, Staines Road, Hounslow. 1991-1995.
Michael P. Maine (56) Group Technical Director since 1991.
Dr. H. J. Maxmin (54)* Non Executive Director since March 1994. Non Executive Director of Dawson
International PLC since September 1995. Director of Streamline Inc. since
September 1996. Chairman of Think Ahead Inc, since April 1997. Non
Executive Director, Geest plc, West Marsh Road, Spalding, PE11 2BB,
1993-1997. Chairman, Global Brand Development since 1995. Chairman of
Informate Associates since 1995. Chief Executive Laura Ashley PLC, 27
Bagleys Lane, London SW6 2AR, 1991-1994. Director, Progressive Insurance Co
Inc,. 1989-1995.
Lawrence M. Urquhart (61) Non Executive Director since January 1993. Chairman of Burmah Castrol plc,
Burmah Castrol House, Pipers Way, Swindon, Wiltshire SN3 1RE, since July
1990. Chairman of English China Clays plc, 1015 Arlington Business Park,
Theale, Reading, RG7 4SA, since April 1995. Chairman of Scottish Widows
Fund and Life Assurance, PO Box 902, 15 Dalkeith Road, Edinburgh EH16 5BU,
since May 1995. Non Executive Director of Kleinwort Benson Group plc, PO
Box 560, 20 Fenchurch Street, London EC3P 3DB, since December, 1994. Non
Executive Director of Premier Consolidated Oilfields PLC (now Premier Oil
PLC), 23 Lower Belgrave Street, London SW1W 0NR, 1986-1994.
</TABLE>
- ------------------------
* Citizen of the United States of America.
I-2
<PAGE>
<TABLE>
<S> <C>
J. Russell F. Walls (53) Group Finance Director since June 1995. Director, Wellcome
plc (now Glaxo-Wellcome), Lansdowne House, Barclay Square,
London W1X 6BQ, January 1995-April 1995. Director, Coats
Viyella plc, 28 Saville Row, London W1, until 1994. Non
Executive Director Ladbroke Group PLC, Chancel House,
Neasden Lane, London NW10, since June 1996.
Lord Wright of Richmond Non Executive Director since August 1992. Non Executive
GC MG (65) Director, De La Rue plc, 6 Agar Street, London WC2, since
1991. Non Executive Director of The British Petroleum
Company plc, Britannic House, 1 Finsbury Circus, London EC2M
7BA, since 1991. Non Executive Director of Unilever PlC,
Unilever House, Victoria Embankment, London EC4, since 1991.
Non Executive Director of Barclays Bank plc, Lombard Street,
London EC3, 1991-1996.
Mrs. Rachel Rowson (42) Company Secretary BAA plc since September 1993. Assistant
Company Secretary since April 1987.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, age and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five years
of each director and executive officer of the Purchaser. Each such person is a
citizen of the United Kingdom, unless otherwise indicated, and the business
address of each such person is c/o BAA plc, 130 Witton Road, London SW1V 1LQ,
England.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
J. Russell F. Walls (53) President of the Purchaser; Group Finance Director BAA plc since June 1995.
Director, Wellcome plc (now Glaxo-Wellcome), Lansdowne House, Barclay
Square, London W1X 6BQ, January 1995-April 1995. Director, Coats Viyella
plc, 28 Saville Row, London W1, until 1994. Non Executive Director Ladbroke
Group PLC, Chancel House, Neasden Lane, London NW10, since June 1996.
Brian Collie (42) Vice President of the Purchaser; Retail Director, Gatwick Airport Limited
for the past 5 years. Director of Duty Free Confederation, 31 Great Peter
Street, London SW1P 3LR, May 1996-April 1997.
Peter J. Jones (41) Treasurer of the Purchaser; Finance Director, BAA International, since May
1996. Head of Financial Planning, BAA plc, 1992-May 1996.
Robert Herga (37) Secretary of the Purchaser; Head of Legal Services, BAA plc since February
1996, previously Solicitor, BAA plc.
Nicholas A. Ziebland (44) Vice President of the Purchaser; Group Retail Strategy Director, BAA plc,
since February 1996. Head of Retail Operations, October 1995-February 1996.
Head of Retail Operations BAA plc, 1992-1995.
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR BY OVERNIGHT
CARRIER:
IBJ Schroder Bank & Trust (212) 858-2611 IBJ Schroder Bank & Trust
Company Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing
Attn: Reorganization Window, Subcellar One, (SC-1)
Operations Department
</TABLE>
TO CONFIRM FACSIMILE TRANSMISSIONS CALL:
(212) 858-2103
Any questions or requests for assistance may be directed to the Dealer
Manager or the Information Agent at their respective telephone numbers and
locations listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. You may
also contact your broker, dealer, commercial bank or trust company or nominee
for assistance concerning the Offer.
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
660 MADISON AVENUE
NEW YORK, NEW YORK 10021
(212) 418-4209
(CALL COLLECT)
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
